PROFIT TAKING: NSE INDEX SLIPS, AS INVESTORS PREPARE TO POSITION IN STRONG LOW VALUE STOCKS

MARKET UPDATE FOR DECEMBER 13, 2017

The stock market on Wednesday had a very volatile and mixed session, wiping out much more than previous day’s marginal gains as profit taking resumed full throttle especially in blue chip stocks that had performed well in price appreciation recently.

At the end of the day, there were more red than green across the board in a corrective wave that is preparing for the last few days of the year’s final rally in extension of Wave 5 at a time current downtrend is looking for support to propel the expected yearend rally ahead of the January effect and full year earnings reporting season in 2018 Q1.  

The day started out with a little pop to the upside on the index and then had a major pullback, trying to retest the former resistance level that is becoming a support level in the current correction season on profit booking. The market closed lower after touching intraday high of 38,945.09 and low 38,514.43, but could not breakdown the last resistance level but today market forces and sentiment will determine a full breakdown or reversal.

The day’s market technicals  was weak  as selling pressure stood at 95%, with volume index of  0.67 and buying volume of 5% of the total transaction to continue the bear transition. Money flow index revealed funds are leaving the market as profit taking has persisted for days now.  The reversal of this trend is imminent as traders and investors take advantage of the pullback to position for earnings season.

Meanwhile, the Nigerian Stock Exchange (NSE) composite index shed 389.99 basis points to close at 38,534.64, from the 39,924.63 points, representing a 1.00% decline, just as market capitalisation was down by N135.82bn to N13.42tr, from previous day’s N13.56tr, also representing a 1.00% value loss. The resumed downturn was due to losses recorded in high cap stocks like Unilever, Lafarge Africa, Dangote Cement, NB, Guaranty Trust Bank, Zenith Bank, FBNH, Stanbic IBTC and Presco. This impacted negatively on the ASI’s year-to-date returns, which reduced to 43.39%, just as YTD growth in market capitalisation stood at N4.22tr, representing a 45.56% rise over the year’s opening value.

Wednesday’s market breadth was negative as the number of decliners outnumbered advancers in the ratio of 27:19 on a relatively high traded volume that was lower than previous day’s level. 

Market activities in terms of volume and value were down by 29.98% and 83.59% respectively to 323.95m shares worth N4.40bn from previous day’s 462.67m units valued at N26.81bn. Transactions was majorly driven by banking stocks despite the losses recorded by first tier banks, trades in Sterling Bank, FBNH, Diamond Bank, Guaranty Trust Bank  and UBA topped the volume chart.

At the end of the day trading Berger Paints and FCMB topped the advancer’s log, gaining 4.93% and 4.92% respectively to close at N8.09 and N1.28 on positive market forces and sentiments, Presco  and Cadbury shed 4.98% and 4.95% to close at N65.00 and N15.54 respectively  on market forces and  profit taking,

TODAY’S OUTLOOK

The ongoing volatility will continue as traders take profit and seek information to reposition, especially as inflation figure for November is expected before the week runs out and full year earnings season approaches. The positive outlook for emerging market in 2018 as a result of high commodity prices is a major attraction as currencies of these developing markets remain relatively stable. It begins to make much more sense for investors when you add the undervalued nature of assets on these exchanges.

Again, we advise that investors allow numbers to guide their decisions while repositioning for the rest of the year’s trading activities, especially now that stock prices remain volatile amidst improving company, economic and market fundamentals.

It is time to combine fundamentals and technical tools to take decision by knowing the support and resistant level to reposition or exit any position. Market is in phases know the cycles in order to manage your trading and investing risk. For stocks that should be on your shopping list to buy in this seasonality changes as the year winds down, sign up to INVESTDATA BUY AND SELL signal setup by calling 08032055467.

Get your home study pack on INVEST 2018 Traders & Investors Summit and ride with the current recovery on Nigeria’s stock market and economy. By investing and trading knowledgeable. You can also still access stocks analysed in the home study pack of the INVEST 2018 traders & investors summit, which will be available this Friday.  

Comprehensive training materials on stock Trading and Investing for Financial Independence series are Available, you can play and watch on your mobile phone, laptop, desktop and Tv. Kindly call or send yes to 08032055467, 08028164086 or 08111811223.

Ambrose Omordion
CRO | Investdata Consulting Ltd
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